Payroll: Get it right, or risk losing business talent

Jonathan Dowden, payroll expert at Sage UK, explores importance of getting payroll right to ensure business talent remains in the business.

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Payroll is too often seen as just a back-office process that should run seamlessly in the business background. However, payroll is complex and comes with a raft of challenges as well as legislative changes to adhere to.

It is indispensable to any business and is something employers must get right, all the time. The key issues payroll departments face are making sure employees are paid on time, ensuring accuracy and keeping up-to-date with legislation. Companies must ensure each alleviate such payroll pressures to keep business thriving.

Paying people properly

An effective and efficient payroll department is one of the most powerful weapons for enhancing staff morale and bolstering businesses’ reputations among new recruits and existing employees. Yet too often the work of payroll goes uncredited and unrecognised within businesses.

Payroll is not just about pay – it’s about people and perception. Employees will notice the payroll department when there are problems with their pay, but businesses should be celebrating their work all year round to increase awareness of payroll’s integral role.

Failure to pay employees correctly and on time is one of the biggest factors affecting job satisfaction. At Sage, we recently surveyed over 1,000 consumers and found that 90 per cent of people would be less likely to work for a company or even apply for a job if it had a reputation for paying people late or incorrectly. A third of workers would also look for a new job if their employer paid them incorrectly just once.

With over half of consumers stating that being paid incorrectly would cause them to not only resent their employer but not trust them either, these findings challenge the view of payroll as a back-office process that doesn’t necessarily affect business performance.

Yet, almost one in four (22 per cent) employees report that they have been paid late in the last 12 months. Businesses must alleviate the potential problem of payroll wrongdoings by putting the right processes in place and bringing payroll out of the shadows and into the spotlight for business.

Accuracy

Accuracy and compliance should be the goal of every payroll practitioner, but in order to improve accuracy you will need to recognise the current pitfalls in the industry.

Understanding common payroll errors, why they occur and what actions are being taken to improve processes, can help minimise errors in the future.

Most payroll systems provide information on the number of entries processed. These will be good indicators of pressured periods and trends, as well as particular types of entries that are more time consuming or prone to error.

Keeping up with legislation

Payroll legislation is constantly changing. Real Time Information (RTI) represented the biggest change to PAYE reporting for over half a century, whilst the introduction of auto-enrolment indicates a fundamental change to workplace pensions that has a major bearing on the payroll department. Software allows payroll departments to seamlessly comply with new legislation and ensure processes are automatically updated to ensure the pressure is alleviated from the payroll team.

Payroll is a demanding and time-consuming task. Businesses should be empowered with the right people and technology to make paying people simple.